After failing to become President of the United States, Vivek Ramaswamy has decided to turn his attention to a new venture. Indeed, the former Republican candidate has acquired an activist stake in BuzzFeed (NASDAQ:BZFD) and BZFD stock.
Originally an entertainment company that published online quizzes and humorous articles, BuzzFeed also demonstrated its prowess as a news reporting venue when former President Donald Trump rose to political prominence. Now Ramasway — a far-right politician who has displayed a strong media bias — seems interested in gaining control of the digital media firm. News of his 7.7% stake originally sent BZFD stock up today, although shares have been volatile since the news broke.
This development raises an important question: Why would someone like Ramaswamy want to stake a bet on a struggling media company — especially one often associated with liberal politics?
What’s Happening With BZFD Stock?
There’s no denying that it hasn’t been an easy year for BuzzFeed. The company reported worse-than-expected revenue for the fourth quarter of 2023 and announced layoffs in February 2024. Additionally, while shares have risen considerably over the past month, BZFD stock still trades at around $3, keeping shares at penny stock price levels.
Of course, the announcement of Ramaswamy’s activist stake has generated some trading momentum and volatility. However, the company has faced significant problems since its high-profile initial public offering (IPO). As Financial Times reports:
“BuzzFeed isn’t what it once was. It went public though a shrivelled [SPAC] deal in 2021 but that ended up a disaster, with the shares collapsing from over $10 to a nadir beneath a buck earlier this year. The Pulitzer Prize-winning but awesomely unprofitable BuzzFeed News was finally shuttered last year, leaving Huffington Post as […] the group’s news site. More valuable assets like Complex have already been sold off.”
Ramaswamy revealed his intentions regarding the company in a filing with the U.S. Securities and Exchange Commission (SEC), stating that he wants to “engage in a dialogue” with the board or management “about numerous operational and strategic opportunities to maximize shareholder value, including a shift in the company’s strategy.”
At first glance, that makes sense. But it should be noted that Ramaswamy has made it clear how he feels about the media. On January 11, 2024, he shared the following on X:
Many of these points are baseless allegations. But the fact that someone like Ramaswamy is suddenly making a sizable bet on a mainstream media stock says a lot. He’s likely focused on gaining control of the company and shifting its focus to conservative coverage. And if that’s the case, investors should be careful.
Why It Matters
If Ramaswamy is seeking to turn BuzzFeed into another right-wing outlet, BZFD stock will likely be compromised. The 2024 presidential election is approaching, but as I’ve reported for InvestorPlace before, investors should consider focusing on media stocks that come with less political bias.
Financial Times speculates that “it’s hard to know what Ramaswamy really wants with this move, aside from attention.” But whatever the former candidate wants could easily end up hurting BZFD stock at a time when the company should be turning around.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
